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LCP Investment Summary March 2021
Posted on 1 April, 2021 by Administrator
Global equity markets rose 6.8% in March (in € terms), with returns boosted due to the
U.S. Dollar strengthening by nearly 3% against the Euro.
Equity investors again looked to the positives with global economic growth forecasts
expecting a strong rebound over the remainder of 2021 and into 2022. Inflation
expectation forecasts continue to rise, helped late in the month by the announcement
of President Biden’s proposed $2trn infrastructure package, leading to higher bond
yields. A number of the larger ‘online/work-from-home’ related stocks underperformed
over the month as their valuations/price were hit by rising bond yields.
European equities had a very strong month with encouraging economic data for both
the manufacturing and services sectors, and the German DAX index hit a record high
near month-end. However, the Covid vaccine rollout lags the U.S. and the U.K. due to
supply problems, the temporary suspension of the Astra Zeneca vaccine and a dispute
over the export of vaccines to non-EU countries. A number of countries such as Italy,
Germany and France also saw either an extension or a tightening of Covid restrictions
as case numbers rose.
Longer-dated Eurozone bond prices fell 0.8% in March, with the yield on the AAA
Eurozone 15+ Year Index rising to 0.12% by month-end. The Euro Broad Sovereign
10+ Year Index fell by 0.2% with its yield rising to 0.66%.
It was a mixed month for bonds, with yields rising over the month due to improving
global economic forecasts, rising inflation expectations and higher U.S. bond yields.
Yields did fall at times during March over Covid concerns and the ECB’s announcement
of an increase in its bond-buying programme.
Sample DC Schemes
Two of our sample DC Strategies rose over March as most asset classes were positive